China’s reaction to the Japanese nuclear crisis

(March 28, 2011) While the world focuses on the nuclear crisis in Japan, China is contemplating a rapid expansion of its nuclear energy capacity.  China currently has 13 operating nuclear reactors, 27 under construction, 50 planned, and 100 more proposed.  By 2020, the country’s nuclear capacity is expected to increase ten-fold.  The Chinese government reacted to the crisis in Japan by announcing a moratorium on nuclear project approvals, pending a review of their nuclear safety plans.

Here is a rundown of the political fallout of the Fukushima meltdown on China’s energy policy.

Chinese Nuclear Policy

Despite the fact that China announced a moratorium on nuclear project approvals, many critics doubt the Chinese government will alter its course, especially as they are expected to break ground in April on a nuclear project that was approved before the moratorium.

Market Watch, April 19, 2011, Japan, China, and lessons from nuclear leaks

New York Times, March 24, 2011, Pressing ahead where others have failed

MSNBC, March 24, 2011, China’s nuclear energy policy: ‘Build, baby, build!’

Bloomberg, March 23, 2011, China to build nuclear plant using fourth generation technology in April

New York Times, March 23, 2011, Panic may slow nuclear energy in China

Los Angeles Times, March 19, 2011, Japan crisis probably won’t end China’s commitment to nuclear power

Sky News, March 17, 2011, China halts nuclear projects over Japan crisis

Wall Street Journal, March 16, 2011, China, also on fault lines, faces new atomic scrutiny

Bloomberg, March 16, 2011, Nuclear plant funding undeterred amid Japan crisis: China Credit

Nuclear Safety in China

Much of China is susceptible to large earthquakes, and the Chinese government is known to cut corners with infrastructure projects.  Should we be concerned?

Caixin Weekly, April 7, 2011, Negligence, Denial and a family’s radiation tragedy

The Guardian, April 3, 2011, More than one in 10 nuclear power plants at risk from earthquakes

Washington Post, April 2, 2011, China expanding nuclear but lacks emergency planning

Epoch Times, March 27, 2011, Nuclear power in China a question of safety, and trust

Xinhuanet, March 22, 2011, China hopes for Japan’s “timely, accurate” info on radioactive leaks

Washington Times, March 16, 2011, The next nuclear meltdown: China

Wall Street Journal, March 14, 2011, China’s nuclear energy officials watch Japan

Radiation Fallout

While no one is sure whether China will be impacted by radiation from the Japanese nuclear fallout, Chinese citizens are in panic mode.

Xinhuanet, March 24, 2011, Precipitation, wind help dilute aerial radiation in Japan

Wall Street Journal, March 16, 2011, China fights fears and rumors of Japan radiation

NBC News, March 18, 2011, Chinese hoard salt out of radiation fears

Reuters, March 21, 2011, China to monitor food imported from Japan for radiation

Xinhuanet, March 20, 2011, No immediate threat to China from radioactive leak in Japan

Nuclear Liability in China

Unlike virtually every other industry in countries with nuclear power reactors, operators and suppliers to the nuclear industry enjoy either complete exemption from financial liability or limited liability. Because the potential harm that a nuclear accident can cause is so great, nuclear power facilities are uninsurable. So, to ensure that nuclear power stations are built, governments around the world have absolved the nuclear industry of the potentially catastrophic financial consequences of an accident. This amounts to a massive subsidy to an inherently dangerous technology and insulates the nuclear industry from the risks it creates for society.

China is no exception. China caps liability for nuclear facilities at roughly US$160 million, nowhere near enough to cover a nuclear disaster.  According to one estimate, the Japanese government could end up spending 1 trillion yen (US$12 billion) to compensate businesses and individuals for damages resulting from the Fukushima disaster.

If such an accident were to occur in China, compensation would be paid by Chinese taxpayers and not by negligent companies or individuals, creating a problem of moral hazard and undue risk-taking by nuclear operators and officials.  (“Moral hazard” refers to people’s increased incentives to take risks when insured.)

OECD Nuclear Energy Agency, Nuclear operator liability amounts & financial security limits

Bloomberg, March 23, 2011, Atomic cleanup cost goes to Japan’s taxpayers, may spur liability shift

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